As our global corporate regime goes, so goes America

The world sees an American empire. Rather, the world's multinational corporations are using the United States' military and economic dominance to create a corporate empire.

However you feel about that empire, it is now in trouble. Economic institutions and principles created to control the 20th century's Cold War are not fitted to 21st century globalization, technology and religious militancy.

The prognosis isn't good. These mega-trends of the 21st century are already working to thwart the corporate empire even as that power is reaching its zenith. Just as the multinational corporations were celebrating total victory with the collapse of the Soviet Union and the presidency of George W. Bush, the financial crisis and worldwide recession came along. The corporate agenda took the credit and got the blame. The American economy is now embedded in this empire and, sadly, we will all share its fate.

In the second half of the 20th century, the need for world policy coordination - world governance, if you will - led to multilateral institutions by which corporations were pretty much able to impose their policies on the world economy. The International Monetary Fund, the World Bank and the World Trade Organization are the most important and powerful of these. All three are based on multilateralism (any market economy can join), free trade (at least in manufacturing and agriculture) and the corporate values of efficiency and profit.

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These institutions served the corporations well in the 20th century but were quickly recognized as inadequate to the 21st. They were thus abandoned in favor of neoliberalism, which advocates tight monetary and fiscal policy, deregulation, privatization and market fundamentalism. In current jargon, this is the austerity option. Unfortunately for the corporations, this is also proving to be inadequate to the tasks of this new century.

The 21st century's struggle will be with the rise of China, the awakening of Islam and the future of Africa - Mediterranean, Nilotic and sub-Saharan. The periphery in Latin America and Southeast Asia has already fought off the corporate empire and its neoliberalism. Neoliberalism, whatever its failures, remains the preferred policy choice of the empire.

Neoliberalism pretends a democracy that treats everyone the same. In the 20th century, the advanced countries were supporting multilateral agreements that allowed all to participate. But now they are doing the real deals in bilateral or regional agreements like NAFTA and the Trans Pacific Partnership. The first of these puts a wall around Mexico, and the second is being designed to exclude and isolate China. It is a rejection and undermining of globalization.

But neoliberalism is also free markets and, for instance, "liberalized" foreign direct investment. The corporations idolize markets but are willing to impose restrictions when they are in the form of patents, copyrights or software and intellectual-property laws. The corporations might control the U.S. market, but others are rejecting the restrictions of "free trade."

Under previous economic rules, Brazil and India, among others, balked at monopolistic pharmaceutical prices and won. The same thing is happening with genetically modified crops, except that Monsanto is winning.

The Chinese are, of course, leading this challenge to neoliberalism. They have a managed capitalism that breaks all the neoliberal rules and succeeds beyond all expectations. They insist on the hiring of local managerial and technical staff. They do not allow foreign investment in certain specified industries. The entire financial system is owned and/or controlled by the government.

China has done exactly the opposite of what neoliberalism calls for and has had that astounding 9 percent annual growth rate for three decades. China prospered as all the world was falling apart. Russia, unhappily, followed the rules and ended up an economic disaster.

Others besides China successfully broke the money rules. Argentina was the first of the emerging market economies to directly challenge the IMF and the World Bank, and it became an economic success story. Brazil, Venezuela, Bolivia, Ecuador, Paraguay, Uruguay, Nicaragua and El Salvador elected regimes that explicitly campaigned against neoliberalism. Well, 80 years ago we would have sent in the Marines. Thirty years ago we did send in the CIA. Of course, for a decade President George W. Bush neglected Latin America, and it learned it could well do without us.

In the first, but still minor, threat to the hegemony of the American dollar, the 16 countries of ASEAN, including China, Japan and South Korea, have set up a basket of currencies that, it is expected, will be an Asian Monetary Unit.

The empire is itself undermining globalization and free markets. It is trying to restrict technology with draconian patent, copyright and intellectual property laws. And it has no value system to put up against Islam or any kind of religious awakening.

The countries that follow neoliberal principles suffer for it, and that includes most of the European Union. Those who rejected IMF, World Bank and WTO austerity prospered in difficult times.

To the extent that America turns toward the corporate agenda of tight money, paying off the debt, deregulation, privatization and the whole neoliberal schmear, we go down with the empire.

A resident of Mt. Gretna, Heise holds a Ph.D. in economics and is professor emeritus of economics at Lebanon Valley College. His column appears every other Thursday. He maintains past columns and can be reached through his blog, paulheise.blogspot.com.